Nvidia Reports Jump In Q2 Revenue, Strong Tegra Sales

Nvidia reported Thursday a boost in revenue for its second fiscal quarter, citing strong sales of its Tegra 3 mobile processors for smartphones and tablets.

The Santa Clara, Calif.-based chip maker pulled in a quarterly revenue of $1.04 billion, up from the $1.02 billion it reported during the same quarter last year. It did, however, announce a year-on-year decline in net income, reporting $119 million compared to last year's $151.6 million.

Nvidia CEO Jen-Hsun Huang said that tablets, even more than smartphones, will fuel much of the company’s growth over the next few years.

"I think [the tablet market] is likely to be a strong growth opportunity for us, as we had hoped and as we had worked on. You know, a lot of people think that the tablet market, in just a few more years, will be as large as the entire PC mobile market ... and I really wouldn’t be surprised by that," Huang said on an earnings call with investors Thursday. "So, if we can protect and even grow from our current position in tablets, I think this is going to be a very, very large part of our overall business."

Tegra 3, launched in November, is said by Nvidia to provide up to three times the graphics performance of its predecessor Tegra 2 and consume up to 61 percent less power, making it ideal for mobile devices. Most of the chip’s efficiency is derived from Variable Symmetric Multiprocessing (vSMP) technology, a design technique that arms it with a fifth CPU "companion core."

Through vSMP, the four main cores in Tegra 3 collectively handle processing for performance-demanding tasks, but the fifth companion core is switched on when low-power tasks are being performed, allowing mobile devices to conserve both power and battery life.

Tegra 3 sales reached a new record, Nvidia said, driving up overall revenue for its consumer products group 35.5 percent quarter on quarter to $179.7 million.

Nvidia also reported strong quarterly demand for its Kepler-based GPUs for notebook and desktop PCS. Huang said GPU sales for both desktops and notebooks were up, with notebook sales, in particular, hitting a record high due to strong design wins in Intel Ivy Bridge-based PCs. As adoption of Ivy Bridge-powered systems accelerates, Huang said demand for Nvidia's Kepler GPUs, which he referred to as "the best GPU we have ever created," will continue to rise as well.

"Desktop and notebook were both up strongly in Q2 and we expect both of them to yet again be up strongly in Q3," Huang said.

Nvidia's professional solutions business, responsible for its workstation graphics and computing units, was the only business segment in which revenue slid quarter on quarter. It was down 7 percent, accounting for $196.3 million.

The drop was attributed to a weak European economy and the delayed ramp of Intel’s Romley workstation platform. Nvidia said the adoption of its new Tesla K10 GPUs is expected to boost numbers in its professional solutions business segment over the next few quarters.

Looking ahead, Nvidia anticipates its revenue to continue to climb into its third fiscal quarter, hitting somewhere between $1.15 billion and $1.25 billion.